How to form a home buying strategy and make your home loan more affordable

Buying a home
Image: Getty

On most homes in Australia you’re required to put down a deposit, typically around 20% of the property’s value.

The remaining 80% is usually covered by a home loan. However, the size of that loan will depend on three simple factors:

  • The size and type of property
  • The location
  • And how much your lender is willing to lend you

Now the approval of a home loan requires that you meet a set of criteria, well spelled out here in this guide on pre-approval. But what you buy and where it’s located is up to you, and is a basic calculation that should be done ahead of time.

Even if you’re still thinking about buying or still looking at properties, the summation that needs to be done in this process answers the question - how much of a first deposit can I actually afford? And to do that, you need a general idea of property pricing.

How do I know the right property and home loan for me?

The way properties are priced in Sydney, for example, is largely based on buyer demand. And over time, buyer demand has only grown in the Harbour City because the population continues to grow. At the same time, only a limited supply of homes has been added to the mix.

This is the reason the median house price in Sydney was a relatively low $766,806 in 2013 but has essentially doubled 10 years later, now up to $1.6m, as per Domain.

What’s worth noting here is perhaps not the massive jump in price tags - as alarming as that is - but the fact that a Sydneysider could not long ago put down a 20% deposit of around $150,000  (based on these medians), and yet is now asked to fork over a whopping $319,000 as a first deposit (again, based on the current median), according to Domain.

If you want to put this into context, consider that in 2007 or ‘08, a buyer in Sydney could scoop a unit within 15 kilometres from the CBD for under $400,000!

Research your suburb, research your home loan

So what’s the point? Well, one thing remains very true in property and that’s the idea that as a population grows and the range of housing shrinks, property buyers have to become even more savvy. They really need to be better-equipped with information than those in the previous generation of home buyers.

A strategy is crucial. This might mean buying further from the CBD. It might mean choosing a one-bedroom unit over a two-bedroom. Maybe ‘rentvesting’ is an option. Or it might mean buying in another city altogether in order to get onto the property ladder.

Take Brisbane, for example, where as of December 2023, the median house price was $888,285 and therefore the 20% first deposit based on this median was just $177,657, as per Domain. This is significantly lower than what you’d pay in Sydney (or Melbourne for that matter, where it’s around $200,000).

So if you were willing to put a plan together, where you might buy a property in a less congested city, somewhere outside of the inner circle of suburbs, and possibly a little smaller than the average home, you might just find yourself in a better position to afford your 20% home loan deposit. 

This, together with a lower interest rate on your home loan, might just be a strategy worth targeting. We can get you started here at Mozo - our experts review many of the best home loans on the market. Get started by comparing some of the top home loans below! 

Compare top home loans - last updated 22 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

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  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

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  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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    Details